The plaintiffs, who lost money in syndicated mortgage investments, sought leave under the Crown Liability and Proceedings Act, 2019 to proceed with a class action against the provincial regulator (FSCO) and its senior employees.
The plaintiffs alleged that FSCO's failure to take regulatory action earlier despite warnings of a Ponzi scheme constituted bad faith.
The court granted leave for the claim of misfeasance in public office, finding a reasonable possibility that a trial judge could infer bad faith from FSCO's inexplicable carelessness.
However, leave was denied for the claims of misconduct by a public authority (which does not exist in Ontario) and negligence (as FSCO owed no private duty of care to individual investors).
